Government Tax Amnesty Scheme
Covid-19 has taken a toll on the world economy. Millions of people have become jobless due to continuous lockdowns. Pakistan has, although did very well in controlling covid-19 spread, but it’s already fragile economy has suffered a lot due to this pandemic. The daily wagers have suffered the most. The government is taking different steps to combat this unemployment problem. One of these steps is the Prime Minister’s Amnesty Scheme for construction sector.
This amnesty scheme can only be availed by the builders and construction company owners. An opportunity has been given by the government to people to turn their black money white by investing in the construction sector. Immunity from declaring income source will be given to the investors. For this purpose an amendment has been made to Income Tax Ordinance. Although International Mutual Fund(IMF) and Financial Action Task Force(FATF) are keeping an eye on flow of funds but the government is quite hopeful that due to impacts of covid-19 on the economy no problems will be faced from IMF and FATF.
A portal has been created on Federal Board of Revenue (FBR) website. Willing people can register themselves on this portal. The scheme was earlier valid till 31st December 2020 but has now been extended to June 2021. The timeline for investors, registered with the FBR under this scheme, to complete their projects has been extended until September 2023.
Indeed, to a large degree, the scheme has achieved the desired effects of resurrecting a dormant construction sector and generating job prospects for daily wagers. Sales of building materials such as cement, steel and glass have risen exponentially, with land prices reaching a peak again in many cities. This gave the government, which had otherwise failed to display any economic achievement, an opportunity to brandish the statistics to highlight its ‘success’ in saving the economy from the adverse effect of the virus.
Still, the tax amnesty for real estate investment has also raised concerns about the role of the ruling party on corruption and its so-called push for transparency. If a waiver on black money can be offered to constructors, then others should also be given an opportunity to avail of this opportunity and should be extended with the same immunity for achieving a stable economy.
There really is no question that many building projects have been resurrected, explaining the increased sales of cement and steel. which have stalled due to fear of NAB intervention or the government’s economic stabilization policies. But the truth remains that developers, instead of investing in construction, have mainly used the system to launder their illicit money through land sales and purchases. Until the FBR begins to publish descriptions of the projects and updates the status of construction operation periodically, the actual effect of the incentives package on the construction industry will not be understood. Likewise, for accountability, the State Bank should formulate a system for reporting new housing finance disbursements by the banks.